If you don't file and pay your taxes, however, the
things that could happen to you are pretty shocking.

Julius Green, CPA and tax practice leader for ParenteBeard
in the Philadelphia region, explained to us the potential
consequences of letting April 15 come and go tax-free.

Granted, you aren't guaranteed to suffer these consequences, and
everyone's tax situation is different, but here are a dozen
terrible things that could happen if you don't do your
taxes.

You could:

Pay a penalty fee. There are two kinds of "not
doing" your taxes — failing to file and failing to pay. "If you
fail to file, you get hit with a penalty of 5% of the tax owed,
up to five months out, with a minimum penalty of $135, or as much
as 100% of the tax owed — whichever is less," Green says. If you
don't pay, he continues, you're typically charged a penalty, plus
you'll have to …

Pay interest. "Statutorily, the IRS can't
waive interest," explains Green. "They want the time value of the
money you owe them." If you fail to pay, you may be paying a
penalty plus interest, which is usually determined by
the federal short-term rate (anywhere from 1%-4%), plus
3%, for a total of 4%-6%.

Get notices from the IRS. It's probably fair to
assume that no one wants mail from the IRS. But if you don't file
or don't pay, that's exactly what could happen. "The IRS gives
you multiple opportunities to get it right," says Green. "They
have to send you a notice before taking any action, and usually
they need a response in 30-60 days. But many people in this
situation know it's coming, so they panic when they get their
notice and shove it in a drawer to deal with when they have the
money."

But here's the thing: Whether you have the money or not, if you
don't reach out to the IRS upon receiving a notice, they could
start taking action. What kind of action? Well, they can make you
…

Forfeit your refund. It makes sense when
you think about it. If you owe the IRS money, the agency is not
going to hand over any until you pay. For example, if you didn't file taxes in 2012 and the IRS
is after you, but you did file for 2013 and are due a refund, you
may never see that money. The IRS could simply hold onto it. They
can also make you ...

Give up your Social Security. "Through what's
called the Federal Payment Levy Program, the IRS has the ability
to attack certain assets after going through the appropriate
notification process," explains Green. "While they can't inhibit
your ability to earn money, take your work tools, or appropriate
certain benefits like those paid to your children, Social
Security is one thing they can seize."

So much for that tax
refund.Paula Bronstein / Getty
Images

Receive a federal tax lien. It sounds technical,
but basically, a lien is a claim the IRS makes to your property.
This claim, however, isn't another notice you can shove in a
drawer. According to IRS
Publication 594, a lien is a public declaration of the
agency's claim to your property in relation to your other
creditors. Not only may it be filed to employers, landlords, and
creditors, but the lien can make you ...

Lose ground on your credit report. An unpaid
debt to the IRS is just like an unpaid debt to anyone else, and
it will appear on your credit report. "People don't realize that
your credit report reflects your tax liens as much as any other
outstanding debt," says Green. We won't even pretend that it
could be considered "good debt."

Have your property seized. A lien is a claim to
your property; a levy is the actual taking of it. IRS
Publication 594 makes it clear that in some cases, the agency
can appropriate your house or car, not to mention your income or
bank account.

They might restrain themselves if it's agreed that you're
suffering "economic hardship," which means their seizure would
hinder your ability to meet "basic, reasonable living expenses."
Plus, the publication reads, "If there's money left over from the
sale [of your assets] after paying off your tax debt, we'll tell
you how to get a refund." Make of that what you will.

Receive a summons. If the IRS is having trouble
sorting out the taxes you owe, you could get a summons — that's a
legal requirement to appear — to meet with an IRS officer, and
bring appropriate records, documents, and possibly even testify.

It won't necessarily be you who is asked to meet with the agency:
A third party with information relevant to your case, such as a
record keeper from a financial institution, could be summoned
instead. If the IRS is simply gathering info, you'll be informed
of the third-party summons, but if it's in reference to money
it's already clear you owe, you might not even find out.

Declare bankruptcy. Let's hope it doesn't come
to this. "People who might declare bankruptcy are the people who
couldn't pay their taxes because they couldn't afford to pay
their mortgage or expenses and get caught in a bit of a bind,"
explains Green. "Usually it's people who are caught for three or
four years not filing, spending the money they didn't pay the IRS
on things to try and stay above water."

Remember that bankruptcy isn't magic: While in certain cases, a
tax debt can be discharged, if it has turned into a tax lien, it
might not be erased. "Instead," clarifies Green, "the IRS will
generally suspend the debt and seek to collect it after
bankruptcy."

Serve jail time. While jail is unusual for
most well-meaning citizens, it is a possibility. "If the
government deems that you've willfully failed to file or filed
fraudulent returns, they could see it as an attempt to defraud
the government," says Green. "In cases where jail time becomes an
issue, you typically see two things: a lot of income being hidden
from the IRS, and a pattern or some evidence of wrongdoing."
Unless you're a dishonest high roller, it's unlikely that the IRS
will pursue a jail sentence.

Deal with the IRS for a decade. Did we mention
that the government has the right to pursue unpaid taxes for 10
years? While there are certain appeals and exceptions for
individual cases, if you've been a negligent taxpayer (or rather,
non-taxpayer) you can look forward to a long and close
relationship with the IRS.

However, there's hope.

The absolute best thing you can do if you've neglected to file or
pay, says Green, is reach out to the IRS immediately. It may seem
counterintuitive, but the agency is more likely to look kindly on
someone who admits they're off track and wants to work it out
than someone who has been lining the litter box with their
notices. You may be able to negotiate a payment plan or even a
reduction of the total owed.

"You shouldn't panic upon getting a notice from the IRS," says
Green. "There is some recourse, but your options are more limited
the longer you wait to engage."